In conjunction with TokenAnalyst, BitMEX has found that most projects which accepted ETH in their ICOs are sitting on unrealized gains.
Despite the current decline in ETH pricing, most of these projects have not been affected to a great extent. This is because these companies had the foresight to have already sold off most of their ETH holdings. This has allowed their remaining ETH holdings to represent unrealized gains, while remaining afloat in this extended bear market.
In their findings, BitMEX states, “Despite the 85% reduction in the Ethereum price from its peak, the projects have realised gains of US$727 million due to profits from Ethereum have they already sold, often selling before the recent price crash. The 3.8m Ethereum still on the balance sheets of these projects may not have that much of an impact on the Ethereum price, as it represents a reasonably small proportion of the 102 million supply of Ethereum. At the same time, on a macro level, the projects may be feeling reasonably confident rather than needing to panic sell.”
DIAR provides dire outlooks on ICOs
In a recently released look at ICOs, research group DIAR provides the public with a grim outlook on their health. They found that roughly 70% of ICOs that were held are now worth less than when they first completed their fundraising.
This might not come as a surprise to most. With ICOs accepting investments in the form of digital currencies, the prevailing bear market of 2018 is sure to have had a negative effect on their account balances.
Beyond hurting balance sheets, DIAR notes the lack of listing progress for most tokens that have held an ICO over the past 1.5year. DIAR states, “324 tokens, over a third of tokens that completed an ICO and that raised over $2.3Bn in 2017-18 have yet to have their token listed on any exchanges. Half of these projects have completed their funding rounds in 2017.”
This volatility in the market and its effect on small-cap tokens acts as a stark reminder to investors of the inherent risk when investing in unproven projects. Although there will always be projects that beat the odds and strike it big (Cardano, Tron, Neo, etcetera), there will be significantly more that will not be as fortunate.
For those investing in many ICOs hoping to strike it big on one of those projects, that is not investing. That is gambling – and at the end of the day, the house always wins.
The Future of ICOs
People will always gamble. There will always be ICOs –deserving or not- that raise millions from investors. This is clear as day when looking at the amount of money that has poured into the ICOs of 2018. Despite poor success rates, with current dollars raised more than double all of 2017, 2018 is the year of the ICO.